[Interview] Cobus Visagie, CEO, Africa Merchant Capital, South Africa
Cobus Visagie is a chartered accountant and entrepreneur, founder of Africa Merchant Capital, an institution focused exclusively on merchant banking finance and solutions, including corporate advisory, private equity, trade finance, asset finance and investment in Sub-Saharan Africa.
Could you introduce your company?
The Africa Merchant Capital Group (AMC) is a privately owned boutique merchant bank, providing corporate finance advisory, trade finance and asset finance solutions for mid-market businesses active in the high growth markets in Sub-Saharan Africa. We are focussed on the under-banked mid-market and use our experience and the fact that we are solely focused on SSA to originate and finance quality clients on the continent.
Where is Africa Merchant Capital located?
We have an office in London, United Kingdom and another in beautiful Stellenbosch, in the Western Cape of South Africa, but we always have been on the ground traveling doing due diligence or client visits.
When was the company founded and by who?
Africa Merchant Capital was founded by myself and Jan Louis van den Berg. We were introduced by mutual friends around 2006 and we worked together for a private merchant bank in London before starting AMC in 2012. Today we are still the majority shareholders of the group and holding company. Each business unit has their own specialist team and managing director with equity participation in the business.
How is AMC funded?
The initial capital to grow the business was all funded by the founders. It was a long slog initially and a significant risk we took. Today we have different strategies and different funding models for each business.
With our trade finance and asset finance businesses we are the principal and lender of record and have built a very attractive loan book. We have global financial institutions, mostly debt funds, lending to us via risk participation agreements.
Who are your clients?
Our clients are typically African SME’s with balance sheets and turnover exceeding $5m and more than 3 years of audited financial statements.
Also they are fast growing and have no more collateral to provide to their current banks to enable the growth finance requirement for expansions. Our methodology is that we substantially enhance our clients’ working capital profile, enabling them to scale, whilst in full collaboration with existing banking relationships.
What are Africa Merchant Capital’s Unique Selling Points?
Our major value-add in AMC Trade Finance and AMC Asset Finance is that we substantially enhance our clients’ working capital profile, enabling them to scale, whilst in full collaboration with existing banking relationships and without impeding on the bank’s collateral. We are a privately owned business with a self-regulating business structure and a unique mandate focussed on the Sub Saharan Africa mid-market – typical transactions or finance facilities of $5m to $50m.
Also we have an entrepreneurial and partner approach, which is very well received in the African mid-market where bank funding is very limited and dependent on the balance sheet collateral they can provide to the banks.
How has the market responded to AMC services?
To be honest, AMC does not do any marketing. Our business development team basically service clients approaching us via our website, or our LinkedIn accounts, as well as meetings arranged in person via personal and client introductions or Africa finance conferences.
AMC fills a finance gap in the African private capital growth markets – mostly outside South Africa, where there is very little competition. Quality clients requiring growth capital in excess of $5-20m are in many cases limited to a private equity transaction with the accompanying equity dilution for the founders. We provide an alternative in the form of off-balance sheet finance, or we advise the clients via AMC Advisory for an equity or structured debt transaction.
What are the ambitions of AMC?
We want to be the most well respected private merchant bank in Sub Saharan Africa outside South Africa . We thought long and hard before calling ourselves Africa Merchant Capital, and not Frontier or EM Merchant Capital.
We come from Africa and are personally invested in Africa and want to be a custodian of sustainable capital growth for companies in the region.
What does Africa Merchant Capital need to grow and prosper?
We will always require more lines of wholesale funding to our balance sheet to fund the growing pipeline of transactions. We are a very fast growing business due to the immense requirement for trade and asset finance in the SSA mid-market. Our challenge is to find more funding lines to lend to us via our unique capital structure – as we are not a fund nor a regulated bank and based in London, as well as funding Sub-Saharan Africa transactions. We come to the market with a permanent capital vehicle (PCV) structure and a finance proposition that offers international (UK, US, European and EM) fixed income, debt and other specialist finance funds and investors an attractive yield in well structured transactions, packaged and managed out of London – so it takes time for investors to familiarise themselves, but we are making good progress.
What is the latest news from the company?
We are almost continually hiring and we just opened our new office in Stellenbosch, where we among other things, are building a very competent finance and deal team. We are also, different from many competitors in the sector, moving away from spreadsheets and are developing our own loan book and collateral mangement systems, as well as investing and researching blockchain solutions.
It is truly an exciting journey and I foresee that it will continue to be so for a very long time.
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